Bear Traps Along the Way
Plus, headlines to start your week
We’re still in a bear market.
Probably not news to you, but I think it bears (see what I did there) repeating because I’ve seen the overall “tone” about the market shift in the last few days. The Dow, NASDAQ, Bitcoin, and cryptocurrency markets have all done a little better, and this improvement by degrees has unleashed the bulls. They are eager to take back control. After eight months (yikes!) of slog, almost everyone is ready for some relief.
But I’m not sure it is here yet. In fact, I’m concerned we might be in the middle of a bear trap.
Never heard of that term?
Here’s the Investopedia definition:
A bear trap is a technical pattern that occurs when the price action incorrectly signals a reversal from a downward trend to an upward trend. A technical analyst might say that institutional traders try to create bear traps as a way of tempting retail investors to take long positions. If the institutional trader is successful, and the price moves higher briefly, it gives the institutional traders the ability to unload larger positions of stock that would otherwise push prices much lower.
You can find even more about them here: More here:
Bear traps don’t just show up in crypto. They’re all over bond and stock cycles too.
And the point is, don’t get too excited. Not yet, at least. We need more signs the market is headed to an upward trend, and we still need to navigate the rest of what everyone expects will be a choppy summer. The Federal Reserve still plans to raise interest rates further, inflation rages, the retail investor is nervous, and plenty of regulation is ahead.
So, be glad for gains, and for those green candles.
But don’t get too comfortable.
Plus…
The Crypto Connection is for entertainment purposes only and is not meant to be financial advice. Please do your own research before investing in any asset class. Sara Celi is not a financial advisor, and holds several cryptocurrencies. To purchase her books on Amazon, please click here.